Gauging Biopharm Outsourcing

Planning and decision-making for the manufacture of biopharmaceuticals are becoming more complex as companies continue to implement cost-saving efforts, including outsourcing many support and even critical tasks. Companies must make difficult strategic decisions about commercial manufacture earlier in product development. A recent BioPlan Associates analysis found that essentially all biopharmaceutical developers use outsourcing services of some kind for the manufacture of clinical or commercial supplies, process development, R&D, assay services, fill–finish, or other activities (1).

Cost-cutting not a factor

The BioPlan survey, which included responses from 302 representatives from biopharmaceutical companies and CMOs in 29 countries, evaluated 23 key outsourcing areas in biomanufacturing (1). The study showed that companies are incorporating outsourcing as a manufacturing strategy rather than as an ad hoc method of adding flexible capacity or to simply eliminate overhead costs associated with lower value production activities. Data also show a spike in the percentage of biopharmaceutical companies projecting outsourcing of analytical testing, validation services, and fill–finish activities.

Figure 1: Outsourcing actions taken by biomanufacturers to reduce costs at facilities during the past 12 months. (ALL FIGURES ARE COURTESY OF THE AUTHOR)

The BioPlan study further evaluated how companies are addressing cost issues in biopharmaceutical manufacturing. The survey identified activities biomanufacturers undertake to reduce costs. The study showed that outsourcing activities ranked in the bottom quarter of measured factors to reduce costs although outsourcing increased slightly for certain functions as a strategy for cost-containment during the past 12 months (see Figure 1). There was an increase in respondents using outsourcing of jobs in manufacturing to cut costs: 14.5% in 2012, up from 11.8% in 2011. Approximately 13% of respondents outsourced jobs in process development and 8.8% did in R&D. An equal number of respondents (9.4%) reported outsourcing manufacturing activities to domestic and nondomestic service providers. (see Figure 1).

Outsourcing budgets flat

The survey showed clear evidence that budgets are bouncing back in all areas in 2012, except outsourced manufacturing. The uptick in areas other than outsourcing represents a change from two years ago when budgets decreased in areas ranging from production, hiring new scientific staff, and new facility construction.

The survey also separately asked respondents to indicate how their outsourcing in R&D and manufacturing will change during the next 12 months. On average, future outsourcing at individual facilities will see moderate overall increases for all types of outsourcing not just manufacturing (9.3% during the next 12 months). These increases are more heavily distributed on key outsourcing areas (see Figure 2) rather than broadly seen as increases across all operations.